More than £1.7billion was added to the value of Britain’s biggest housebuilders on hopes the Chancellor will cut stamp duty.
Rishi Sunak is expected to propose raising the levy’s threshold so that it would only apply to properties valued at £500,000 or more, instead of the current £125,000.
The changes are expected to be unveiled in an economic statement tomorrow that will signpost the Government’s next moves as it battles to contain the fallout from the pandemic.
The move is expected to turbocharge the housing market – with prices hit by a temporary suspension of sales during part of the coronavirus lockdown – and soothe homeowners’ nerves that a move now might eat into more of their finances. Critics have warned that announcing a stamp duty cut now but implementing it later will lead to buyers waiting until the autumn to purchase homes, creating another blockage in the already-stumbling market.
But investors shrugged off these concerns, sending shares in housebuilders across the FTSE100 and FTSE250 higher.
Barratt Developments, the biggest housebuilder by output, rose 8 per cent, or 39.1p, to 529.4p as traders cheered the report, with Persimmon jumping 6.2 per cent, or 139p, to 2398p and Taylor Wimpey rising 5.1 per cent, or 6.95p, to 143.95p.
Among the mid-caps, Bellway also rose 3.7 per cent, or 92p, to 2591p, Bovis Homes-owner Vistry Group rose 6.8 per cent, or 46.5p, to 727.5p and Redrow surged 5.8 per cent, or 24.8p, to 452p. And smaller rivals such as McCarthy & Stone (up 7.7 per cent, or 5.4p, to 75.4p) also made gains.
The housebuilder rally helped the FTSE100 and FTSE250 start the week on the front foot, with the blue-chip index climbing 2.1 per cent, or 128.64 points, to 6285.94, and the mid-cap index rising 1.4 per cent, or 248 points, to 17550.03.
It wasn’t all smiles on the FTSE250, however, with cinema giant Cineworld falling 4.3 per cent, or 2.56p, to 57.6p after it vowed to take legal action in an escalating row over a terminated takeover.
The British company is being sued by Canadian group Cineplex after it abandoned a £1.4bn deal last month.
Cineworld claims it walked away because Cineplex broke the terms of the agreement, which it denies, while Cineplex argued Cineworld was avoiding its obligation to honour the takeover in light of the pandemic. Relations soured further yesterday when Cineworld hit back and said it would file its own counter-claim.
Mid-cap miners also got off to a difficult start to the week.
Hochschild Mining fell 2.9 per cent, or 5.4p, to 182.5p after work at its Inmaculada silver mine in Peru was temporarily halted after ‘a number of workers’ tested positive for coronavirus.
Latin America has become a new hub for the pandemic, where cases are rapidly rising.
And Petropavlovsk also lost its shine, as major investor Prosperity Capital Management tried to call a one-off meeting to reinstate a slew of directors who were ousted at its AGM in a boardroom coup last month. It closed down 3.8 per cent, or 1p, to 25.05p.
Brokers at Citi took a swing at IT group Softcat, bumping it down to ‘sell’ and trimming its target price from 1050p to 957p.
It closed flat at 1136p, while fellow software group Computacenter rose 0.6 per cent, or 10p, to 1665p as Citi kicked off coverage with a ‘buy’ rating.
And Pensana Rare Earths, which mines minerals used in electric vehicles and wind turbines, became the first mining company to join the London Stock Exchange since the Covid-19 crisis hit.
It did not raise any money in the listing. Shares closed the day at 27p, after going live at 17.5p.
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